Coca-Cola in talks about cut-price £2bn sale of Costa Coffee
Costa Coffee could change hands again after it emerged that Coca-Cola has met potential buyers to discuss a cut-price deal to off-load the chain.The American soft drinks company is said to be working with bankers on a review of Costa, Britain’s biggest coffee chain, that could lead to it being sold.Coca-Cola had high hopes for the Costa brand when it bought it in 2018 from Whitbread, owner of the Premier Inn hotel chain, for £3.9bn.However, the chain has struggled with rising costs, not least the rise in coffee bean prices, and increased high street competition.
The sale of Costa could realise a multibillion-pound loss for Coca-Cola, according to City analysts.One told Sky News, which first reported the sale talks, that it could fetch just £2bn which would be nearly half what it had paid for the business.Coca-Cola’s chief executive, James Quincey, told investors last month that Costa had “not quite delivered” and was “not where we wanted it to be from an investment hypothesis point of view”.He added that the business was “in the mode of reflecting on what we’ve learned, thinking about how we might want to find new avenues to grow in the coffee category”.Coca-Cola is said to have held talks with a small number of possible bidders, including private equity firms, according to Sky News, which cited unnamed sources.
The investment bank Lazard is reportedly helping Coca-Cola to review options for the chain and gauge interest from buyers,Preliminary offers are expected in early autumn, although the report noted that the drinks maker could decide not to proceed with a sale,Costa has more than 2,000 outlets in the UK and early 18,000 employees,However, as well as rising costs it has faced competition from upmarket rivals, such as Pret a Manger and Gail’s,Costa turned over £1.
2bn in its 2023 financial year, according to the most recent annual accounts filed at Companies House, up from 9% on the previous year.However, it reported a pre-tax loss of £9.6m, compared with a profit of £245.9m the year before.Costa blamed the loss on inflationary pressures, as well as write-downs on the value of some investments.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionCosta, which was founded in 1971 by Italian brothers, Sergio and Bruno Costa, was sold to Whitbread for £19m in 1995,When Coca-Cola bought the business, Quincey said there were “great opportunities for value creation”,While Costa’s financial performance has been mixed, last year it paid out £85m in dividends to its owner,Coca-Cola and Lazard were approached for comment,
Do heatwaves, wildfires and travel costs signal the end of the holiday abroad?
It was a prediction nobody wanted to hear. On the main stage of the world’s biggest tourism fair, Stefan Gössling, a leading researcher in sustainable transport, had just calmly announced the looming death of the holiday industry.“We have already entered the beginning of the age of non-tourism,” said Gössling, to an uneasy audience of travel agencies, car rental companies, cruise operators and hoteliers.That prophecy may sound fanciful to holidaymakers in Europe and North America who have been jetting off this summer – as well as to industry executives delighted to see international tourism return to pre-pandemic highs last year – but Gössling argues that as carbon pollution stokes heatwaves, fuels wildfires and ruins harvests, the cost of foreign travel will soar, and fewer people will be able to afford it.“Eighty years ago, mass tourism started in Europe,” said Gössling, a professor at the business and economics school at Linnaeus University in Sweden, who has consulted for the UN and the World Bank
Federal Reserve set to cut interest rates – but still Trump won’t be happy
Stocks soared on Friday following the strongest signal yet that US the Federal Reserve is gearing up to start cutting interest rates again this fall. But how long can this celebration last?While Wall Street cheered the biggest headline from the speech by the Fed chair, Jerome Powell, at the annual Jackson Hole symposium in Wyoming, Powell also delivered a reality check on where interest rates could settle in the longer term.“We cannot say for certain where rates will settle out over the longer run, but their neutral level may now be higher than during the 2010s,” said Powell.In other words: even if the Fed does start cutting interest rates again this year, they may not fall back to their pre-pandemic levels. It’s a signal, despite the short-term optimism on potential rate cuts, that the Fed’s long-term outlook is more unstable
Wall Street jumps after US Fed’s Powell signals possible rate cut – as it happened
US Federal Reserve chair Jerome Powell has nodded to a possible rate cut at the central bank’s September meeting.However, Powell stopped short of committing to cutting rates next months during a speech to policymakers and economists at the Fed’s annual Jackson Hole conference.He acknowledged the tight rope that policymakers have to walk at a time of potential risks for the US jobs market, while there is the possibility that inflation moves higher.Powell said:The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance
Royal Mail still missing delivery targets after sale to Czech tycoon Křetínský
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Fed chair Jerome Powell signals interest rate cuts amid Trump attacks
The Federal Reserve is gearing up to resume cuts to interest rates, its chair, Jerome Powell, has signaled, as he warned that Donald Trump’s tariffs and immigration crackdown had roiled the global economy and hit the US workforce.For months, Powell has ignored demands from the president to cut interest rates and defied Trump’s calls to resign. But as the president ramps up his extraordinary attack on the Fed’s independence, Powell suggested on Friday that central bank officials are considering a rate cut.“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said in a closely scrutinized speech at a Jackson Hole symposium in Wyoming on Friday, highlighting a “challenging” dichotomy of risks: that Trump’s tariffs might increase inflation, while his immigration policies knock the US labor market.Wall Street rose sharply after the address, with the benchmark S&P 500 gaining 1
Wes Streeting’s row with pharma firms grows as they reject NHS drug pricing offer
A row between Wes Streeting and pharmaceutical companies has intensified after drugmakers rejected the health secretary’s latest offer on NHS drug pricing.The two sides failed to reach agreement by a midday deadline on Friday, meaning the mechanism under which the health service claws back some of the money it pays for medicines will continue at a rate the industry said was “unsustainable” and could ultimately disadvantage patients.At the heart of the dispute is the voluntary scheme for branded medicines pricing, access and growth (VPAG), under which pharma companies agree the amount of revenues from drug sales to the NHS they have to pay back.The two sides have been in acrimonious negotiations for months after the government raised the rate last December unexpectedly to almost 23% for 2025 for newer medicines.It is understood that Streeting had made an ultimatum that if the industry did not accept his latest “generous” offer on pricing then the arrangement would continue unamended and on Friday that scenario came to pass
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